Fastenal Company FAST released its sales figures for May, which were lower than April sales.
May net sales rose a marginal 0.3% year over year to $314.4 million compared with $334.5 million last month. In fact, April net sales had risen 6.1% year over year. Daily sales grew 5.3% to $15.72 million, down from 6.1% rise in April. The daily growth rate was much weaker than 13.5% recorded in May last year. Currency had an unfavorable impact of 0.9% in the month, compared with 0.5% negative impact last month.
This industrial and construction supplies wholesale distributor serves customers in the manufacturing and non-residential construction markets. Both the end markets witnessed decelerating growth in the month.
Daily sales to manufacturing customers (representing almost 50% of revenues) grew 4.1%, weaker than a 4.6% increase in Apr 2015.
Daily sales to non-residential construction customers (representing 20% to 25% of revenues) also grew 1.0%, much softer than 3.3% improvement in Apr 2015.
Fastenal’s strategic decision to increase sales personnel at its stores and increase the number of district and regional leaders supporting stores drove revenues in 2014. However, recent revenue results have been unfavorably impacted by poor weather in North America, economic softness, currency headwinds and lower sales from the oil & gas industry. Some of these headwinds are expected to continue in the upcoming quarters. Moreover, an unfavorable product mix, strong emphasis on growing average store sales, pricing and competitive pressure have been hurting the company’s gross margin.
Fastenal carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the broader building sector include Tecnoglass Inc. TGLS, Travis Perkins plc TVPKF and Universal Forest Products Inc. UFPI. All the three companies have a Zacks Rank #2 (Buy).
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